UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM
10-Q



|☒ | Quarterly
    Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | -------------------------------------------------------------------------------------------



For
the quarterly period ended March 31, 2023



|☐ | Transition
    Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------



For
the transition period from____to _______



Commission
File Number: 000-30233



Endexx
Corporation

(Exact
name of registrant as specified in its charter)



|Nevada                                                                                                             |  | 30-0353162                                                                           
|------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------
|(State
                                            or other jurisdiction
    of
    incorporation or organization) |  | (IRS
                                            Employer
    Identification
    No.)



38246
North Hazelwood Circle

Cave
Creek, AZ 85331

(Address
of principal executive offices)



(480)
595-6900

(Registrant’s
telephone number)












(Former
name, former address and former fiscal year, if changed since last report)



Securities
registered pursuant to Section 12(b) of the Act: None



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

☒
Yes ☐ No



Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒ Yes ☐ No



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



|Large
    accelerated filer | ☐ | Accelerated
    filer         | ☐
|--------------------------- | - | ----------------------------- | -
|Non-accelerated
    filer   | ☒ | Smaller
    reporting company | ☒
|                            |   | Emerging
    Growth Company   | ☐



If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐
Yes ☒ No



State
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 504,095,364
common shares as of May 22, 2023






















TABLE
OF CONTENTS



|             |                                                                                       | Page
|------------ | ------------------------------------------------------------------------------------- | ----
|             | PART I – FINANCIAL INFORMATION                                                        |     
|Item
    1:  | Financial Statements                                                                  | 3   
|Item
    2:  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4   
|Item
    3:  | Quantitative and Qualitative Disclosures About Market Risk                            | 9   
|Item
    4:  | Controls and Procedures                                                               | 9   
|             |                                                                                       |     
|             | PART II – OTHER INFORMATION                                                           |     
|             |                                                                                       |     
|Item
    1:  | Legal Proceedings                                                                     | 10  
|Item
    1A: | Risk Factors                                                                          | 11  
|Item
    2:  | Unregistered Sales of Equity Securities and Use of Proceeds                           | 11  
|Item
    3:  | Defaults Upon Senior Securities                                                       | 11  
|Item
    4:  | Mine Safety Disclosures                                                               | 11  
|Item
    5:  | Other Information                                                                     | 11  
|Item
    6:  | Exhibits                                                                              | 12  



2









PART
I - FINANCIAL INFORMATION



Item
1. Financial Statements



Our
unaudited consolidated financial statements included in this Form 10-Q are as follows:



|F-1 | Condensed Consolidated Balance Sheets as of March 31, 2023 (unaudited) and September 30, 2022;                                
|--- | ------------------------------------------------------------------------------------------------------------------------------
|F-2 | Condensed Consolidated Statements of Operations for the three months and six months ended March 31, 2023 and 2021 (unaudited);
|F-3 | Condensed Consolidated Statements of Stockholder’s Deficit as of March 31, 2023 and 2021;                                     
|F-4 | Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2023 and 2021 (unaudited); and             
|F-5 | Notes to Condensed Consolidated Financial Statements (unaudited).                                                             



These
interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2023 are not
necessarily indicative of the results that can be expected for the full year.



3









ENDEXX
CORPORATION

CONDENSED
CONSOLIDATED BALANCE SHEETS

MARCH
31, 2023 AND SEPTEMBER 30, 2022





|                                                                                                                                  |  | March 31, |             |   | September 30, |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ----------- | - | ------------- | -
|                                                                                                                                  |  | 2023      |             |   | 2022          |  
|Assets                                                                                                                            |  |           |             |   |               |  
|Current assets                                                                                                                    |  |           |             |   |               |  
|Cash                                                                                                                              |  | $         | 154,812     |   |               | $
|Accounts receivable, net of allowance of $113,257 and $621,042, respectively                                                      |  |           | 425,345     |   |               |  
|Inventory, net of allowance of $1,124,646 and $1,071,469, respectively                                                            |  |           | 644,971     |   |               |  
|Prepaid expenses                                                                                                                  |  |           | 1,760,967   |   |               |  
|Total current assets                                                                                                              |  |           | 2,986,095   |   |               |  
|                                                                                                                                  |  |           |             |   |               |  
|Investment in marketable securities                                                                                               |  |           | 420         |   |               |  
|Property and equipment, net of accumulated depreciation of $81,976 and $77,044, respectively                                      |  |           | 43,073      |   |               |  
|Right of use asset                                                                                                                |  |           | 30,038      |   |               |  
|Intangible - website domains                                                                                                      |  |           | 16,250      |   |               |  
|Goodwill                                                                                                                          |  |           | 9,807,361   |   |               |  
|Total assets                                                                                                                      |  | $         | 12,883,237  |   |               | $
|                                                                                                                                  |  |           |             |   |               |  
|Liabilities, Mezzanine Equity and Stockholders’ Deficit                                                                           |  |           |             |   |               |  
|Current liabilities                                                                                                               |  |           |             |   |               |  
|Accounts payable                                                                                                                  |  | $         | 3,051,687   |   |               | $
|Customer deposits                                                                                                                 |  |           | 122,970     |   |               |  
|Accrued expenses                                                                                                                  |  |           | 122,597     |   |               |  
|Accrued interest                                                                                                                  |  |           | 746,706     |   |               |  
|Payroll and taxes payable, including related party                                                                                |  |           | 944,607     |   |               |  
|Notes payable, current portion, net of discount of $-0- and $4,291, respectively                                                  |  |           | 4,705,663   |   |               |  
|Convertible notes payable, net of discount of $631,854 and $1,474,338, respectively                                               |  |           | 1,642,059   |   |               |  
|Line of credit                                                                                                                    |  |           | 1,000,000   |   |               |  
|Derivative liability                                                                                                              |  |           | 7,998,699   |   |               |  
|Lease liability right of use                                                                                                      |  |           | 35,656      |   |               |  
|Total current liabilities                                                                                                         |  |           | 20,370,644  |   |               |  
|                                                                                                                                  |  |           |             |   |               |  
|Notes payable, net of current portion and net of discount of $7,481,482 and $7,925,926, respectively                              |  |           | 4,354,232   |   |               |  
|                                                                                                                                  |  |           |             |   |               |  
|Total liabilities                                                                                                                 |  |           | 24,724,876  |   |               |  
|                                                                                                                                  |  |           |             |   |               |  
|Commitments and contingencies (Note 8)                                                                                            |  |           |             |   |               |  
|                                                                                                                                  |  |           |             |   |               |  
|Mezzanine equity                                                                                                                  |  |           |             |   |               |  
|Series H preferred stock, 4,878,049 issued and outstanding, respectively                                                          |  |           | 2,000,000   |   |               |  
|                                                                                                                                  |  |           |             |   |               |  
|Stockholders’ deficit                                                                                                             |  |           |             |   |               |  
|Preferred stock, $0.0001 Par Value, 10,000,000 share authorized                                                                   |  |           |             |   |               |  
|Series A preferred stock, 1,824,000 issued and outstanding, respectively                                                          |  |           | 182         |   |               |  
|Common stock, $0.0001 Par Value, 1,000,000,000 share authorized, 504,095,364 and 501,376,264 issued and outstanding, respectively |  |           | 50,410      |   |               |  
|Additional paid-in capital                                                                                                        |  |           | 33,101,152  |   |               |  
|Accumulated deficit                                                                                                               |  |           | (46,208,070 | ) |               |  
|Non-controlling interest                                                                                                          |  |           | (785,313    | ) |               |  
|Total stockholders’ deficit                                                                                                       |  |           | (13,841,639 | ) |               |  
|Total liabilities, mezzanine equity and stockholders’ deficit                                                                     |  | $         | 12,883,237  |   |               | $





F-1







ENDEXX
CORPORATION

CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS

FOR
THE THREE AND SIX MONTHS ENDED MARCH 31, 2023 AND 2022



|                                                  |  | For the three months ended |             |   | For the six months ended |  
|------------------------------------------------- |  | -------------------------- | ----------- | - | ------------------------ | -
|                                                  |  | March 31,                  |             |   | March 31,                |  
|                                                  |  | 2023                       |             |   | 2022                     |  
|                                                  |  |                            |             |   |                          |  
|Revenues                                          |  | $                          | 2,457,354   |   |                          | $
|Cost of revenues                                  |  |                            | 1,822,912   |   |                          |  
|Inventory impairment                              |  |                            | 47,930      |   |                          |  
|Gross profit (loss)                               |  |                            | 586,512     |   |                          |  
|                                                  |  |                            |             |   |                          |  
|Operating expenses                                |  |                            |             |   |                          |  
|Depreciation                                      |  |                            | 2,366       |   |                          |  
|Advertising and promotion                         |  |                            | 109,292     |   |                          |  
|Payroll expenses                                  |  |                            | 87,786      |   |                          |  
|Professional fees                                 |  |                            | 252,085     |   |                          |  
|Research and development                          |  |                            | 1,487       |   |                          |  
|General and administrative expenses               |  |                            | 273,657     |   |                          |  
|Total operating expenses                          |  |                            | 726,673     |   |                          |  
|                                                  |  |                            |             |   |                          |  
|Loss from operations                              |  |                            | (140,161    | ) |                          |  
|                                                  |  |                            |             |   |                          |  
|Other (income) and expense                        |  |                            |             |   |                          |  
|Change in fair value of derivative liability      |  |                            | 177,161     |   |                          |  
|Financing costs and discount amortization         |  |                            | 660,598     |   |                          |  
|Interest expenses                                 |  |                            | 271,025     |   |                          |  
|Gain on settlement of liabilities                 |  |                            | -           |   |                          |  
|Total other (income) expense                      |  |                            | 1,108,784   |   |                          |  
|                                                  |  |                            |             |   |                          |  
|Net loss                                          |  | $                          | (1,248,945  | ) |                          | $
|Net loss attributable to non-controlling interest |  |                            | 6,920       |   |                          |  
|Net loss attributable to Endexx shareholders      |  | $                          | (1,255,865  | ) |                          | $
|                                                  |  |                            |             |   |                          |  
|Net loss per share - basic                        |  | $                          | (0.00       | ) |                          | $
|                                                  |  |                            |             |   |                          |  
|Weighted average shares outstanding - basic       |  |                            | 504,095,364 |   |                          |  





F-2







ENDEXX
CORPORATION

CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR
THE SIX MONTHS ENDED MARCH 31, 2023 AND 2022



|                                                 |  | Preferred Stock - Series A |           |  | Preferred Stock - Series Z |   |     | Common Stock |  |  | Additional
                                                                                Paid-in |  |  | Accumulated |    |  | Non-controlling |  |             |         | 
|------------------------------------------------ |  | -------------------------- | --------- |  | -------------------------- | - | --- | ------------ |  |  | -------------------------------------------------------------------------------------------------- |  |  | ----------- | -- |  | --------------- |  | ----------- | ------- | 
|                                                 |  | Shares                     |           |  | Amount                     |   |     | Shares       |  |  | Amount                                                                                             |  |  | Shares      |    |  | Amount          |  |             | Capital | 
|                                                 |  |                            |           |  |                            |   |     |              |  |  |                                                                                                    |  |  |             |    |  |                 |  |             |         | 
|Balances at September 30, 2021                   |  |                            | 1,824,000 |  |                            | $ | 182 |              |  |  | 719,571                                                                                            |  |  | $           | 72 |  |                 |  | 486,313,058 |         | 
|Shares issued for services                       |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | 6,211,180   |         | 
|Shares issued for financing                      |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | 2,562,500   |         | 
|Warrants issued for financing                    |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | -           |         | 
|Net loss                                         |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | -           |         | 
|Balances at December 31, 2021                    |  |                            | 1,824,000 |  |                            | $ | 182 |              |  |  | 719,571                                                                                            |  |  | $           | 72 |  |                 |  | 495,086,738 |         | 
|Net loss                                         |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | -           |         | 
|Balances at March 31, 2022                       |  |                            | 1,824,000 |  |                            | $ | 182 |              |  |  | 719,571                                                                                            |  |  | $           | 72 |  |                 |  | 495,086,738 |         | 
|                                                 |  |                            |           |  |                            |   |     |              |  |  |                                                                                                    |  |  |             |    |  |                 |  |             |         | 
|Balances at September 30, 2022                   |  |                            | 1,824,000 |  |                            | $ | 182 |              |  |  | -                                                                                                  |  |  | $           | -  |  |                 |  | 501,376,264 |         | 
|Shares issued for settlement of accounts payable |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | 1,719,100   |         | 
|Shares issued for settlement of accrued expenses |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | 1,000,000   |         | 
|Distributions to non-controlling interest        |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | -           |         | 
|Net loss                                         |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | -           |         | 
|Balances at December 31, 2022                    |  |                            | 1,824,000 |  |                            | $ | 182 |              |  |  | -                                                                                                  |  |  | $           | -  |  |                 |  | 504,095,364 |         | 
|Distributions to non-controlling interest        |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | -           |         | 
|Net income (loss)                                |  |                            | -         |  |                            |   | -   |              |  |  | -                                                                                                  |  |  |             | -  |  |                 |  | -           |         | 
|Balances at March 31, 2023                       |  |                            | 1,824,000 |  |                            | $ | 182 |              |  |  | -                                                                                                  |  |  | $           | -  |  |                 |  | 504,095,364 |         | 





F-3







ENDEXX
CORPORATION

CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR
THE SIX MONTHS ENDED MARCH 31, 2023 AND 2022



|                                                                            |  | For the six months ended |           
|--------------------------------------------------------------------------- |  | ------------------------ | ----------
|                                                                            |  | March 31,                |           
|                                                                            |  | 2023                     |           
|Operating activities                                                        |  |                          |           
|Net loss                                                                    |  | $                        | (2,273,717
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                          |           
|Stock-based compensation                                                    |  |                          | -         
|Shares issued for financing costs                                           |  |                          | -         
|Warrants issued for financing costs                                         |  |                          | -         
|Depreciation and amortization                                               |  |                          | 4,932     
|Amortization of debt discount                                               |  |                          | 1,291,219 
|Change in fair value of derivative liability                                |  |                          | (909,987  
|Gain from settlement of liabilities                                         |  |                          | -         
|Gain from settlement of derivative liabilities                              |  |                          | -         
|Gain on disposition of assets                                               |  |                          | -         
|Bad debt expense                                                            |  |                          | 57,250    
|Impairment expense                                                          |  |                          | 53,177    
|Financing costs                                                             |  |                          | -         
|Default penalty                                                             |  |                          | -         
|Changes in operating assets and liabilities:                                |  |                          |           
|Accounts receivable                                                         |  |                          | 87,811    
|Inventory                                                                   |  |                          | 79,764    
|Prepaid expenses                                                            |  |                          | (393,867  
|Right of use asset and liability                                            |  |                          | 4,122     
|Accounts payable                                                            |  |                          | 507,154   
|Customer deposits                                                           |  |                          | 79,604    
|Accrued expenses                                                            |  |                          | 33,886    
|Accrued interest                                                            |  |                          | 509,003   
|Payroll and taxes payable, including related party                          |  |                          | 29,377    
|Net cash used in operating activities                                       |  |                          | (840,272  
|                                                                            |  |                          |           
|Investing activities:                                                       |  |                          |           
|Proceeds from sale of investments in marketable securities                  |  |                          | -         
|Net cash provided by investing activities                                   |  |                          | -         
|                                                                            |  |                          |           
|Financing activities:                                                       |  |                          |           
|Proceeds from sale of common stock                                          |  |                          | -         
|Proceeds from convertible notes payable                                     |  |                          | -         
|Proceeds from notes payable                                                 |  |                          | 227,500   
|Proceeds from line of credit                                                |  |                          | 1,000,000 
|Repayment of note payable                                                   |  |                          | (827,930  
|Distribution to non-controlling interest                                    |  |                          | (61,262   
|Net cash provided by financing activities                                   |  |                          | 338,308   
|                                                                            |  |                          |           
|Net increase (decrease) in cash                                             |  | $                        | (501,964  
|Cash, beginning of period                                                   |  |                          | 656,776   
|Cash, end of period                                                         |  | $                        | 154,812   
|Cash paid for income taxes                                                  |  | $                        | -         
|Cash paid for interest                                                      |  | $                        | 37,389    
|                                                                            |  |                          |           
|Supplemental schedule of non-cash investing and financing activities:       |  |                          |           
|Debt discount at origination                                                |  | $                        | -         



F-4









ENDEXX
CORPORATION AND SUBSIDIARIES

NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



1.
Organization and Basis of Presentation



We
were incorporated under the laws of State of Nevada on September 5, 1997, as Micron Solutions. From 2002-2005, the Company operated as
Panamed Corporation, a biotech service and licensing company. Panamed Corporation merged with Visual Board Books Inc. (VBB) in February
2005 and changed the consolidated company name to Endexx Corporation (the Company).



Our
primary business is the manufacturing and sale of hemp products and organic, plant-based, all-natural, zero-nicotine vape products. The
Company has the following operating subsidiaries:



| | ● | CBD
                                            Unlimited, Inc. (70% owner)   
| | - | ------------------------------------------------------------------------------
| | ● | Khode,
                                            LLC (70% owner)            
| | ● | Hyla
                                            US Holdco Limited (51% owner)



Basis
of Presentation and Going Concern



The
Company prepares its condensed consolidated financial statements (or “consolidated financial statements”) in conformity with
generally accepted accounting principles in the United States of America. These principles require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are
reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates. The operating
results of the above listed wholly owned subsidiaries were consolidated with the consolidated financial statements of the Company. All
significant intercompany accounts and transactions have been eliminated in consolidation.



Our
consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. We have sustained operating losses since inception, which
raises substantial doubt about the Company’s ability to continue as a going concern.



As
of March 31, 2023, we have a working capital deficit of $17,384,549, and an accumulated deficit of $46,208,070. During the six months
ended March 31, 2023, we had a net loss of $2,273,717 and cash used in operating activities of $840,272. The Company’s ability
to continue in existence is dependent on its ability to develop additional sources of capital, and/or achieve profitable operations and
positive cash flows. Management’s plans with respect to operations include the sustained and aggressive marketing of hemp cannabidiol
products and raising additional capital through sales of equity or debt securities as may be necessary to pursue its business plans and
sustain operations until such time as the Company can achieve profitability. Management believes that aggressive marketing combined with
additional financing as necessary will result in improved operations and cash flow in 2023 and beyond. However, there can be no assurance
that management will be successful in obtaining additional funding or in attaining profitable operations. The accompanying consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.



The
accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting
principles in the United States of America and the interim reporting rules of the Securities and Exchange Commission (“SEC”)
and should be read in conjunction with the financial statements and notes thereto contained in the Company’s latest Annual Report
filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise
indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented
have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected
for the full year.



F-5









2.
Summary of Significant Accounting Policies



Use
of Estimates



The
Company’s financial statement preparation requires that management make estimates and assumptions which affect the reporting of
assets and liabilities and the related disclosure of contingent assets and liabilities in order to report these financial statements
in conformity with GAAP. Actual results could differ from those estimates.



Cash



Cash
includes all highly liquid investments that are readily convertible to known amounts of cash and have original maturities at the date
of purchase of three months or less. There were no cash equivalents as of March 31, 2023 and September 30, 2022. The Company maintains
its cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC
provides coverage of up to $250,000 per depositor, per financial institution, for the aggregate total of depositors’ interest and
non-interest-bearing accounts. At March 31, 2023, none of the Company’s cash balances were in excess of FDIC limits. The Company
has not experienced any losses on these accounts and management does not believe that the Company is exposed to any significant risks.



Accounts
Receivable



Accounts
receivable consists of invoiced and unpaid product sales. The Company records an allowance for doubtful accounts to allow for any amounts
that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer credit worthiness,
and current economic trends. Accounts are considered delinquent when payments have not been received within the agreed upon terms and
are written off when management determines that collection is not probable.



Inventory



Inventory
is composed of finished goods, in-process, and raw goods inventory, valued on a first in first out basis, and includes production cost,
product freight in, and packaging costs. Slow moving and obsolete inventories are written down based on a comparison of on-hand quantities
to historical and projected usages.



The
Company has authorized a consignment inventory arrangement with one of its mass retail customers. After consignment inventory has been
sold by this customer, the customer notifies the Company of the sale and the Company records revenue in that accounting period. The Company
authorizes the replenishment of consignment inventory based on orders placed by the customer. The Company is provided with weekly reports
of consignment sales activity and balances.



Prepaid
Expenses



The
Company considers all items incurred for future services to be prepaid expenses.



Property
and Equipment



Property
and equipment are stated at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to operations as
incurred. Depreciation and amortization are based on the straight-line method over the estimated useful lives of the related assets.
When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts,
and any resulting gain or loss is reflected in operations in the period realized.



Depreciation
is computed on the straight-line method net of salvage value with useful lives as follows:



|Computer equipment and software |  |  | 5 years  | 
|------------------------------- |  |  | -------- | 
|Business equipment and fixtures |  |  | 7 years  | 
|Property and buildings          |  |  | 39 years | 



F-6









Intangible
Assets



Intangible
assets are amortized over their estimated useful lives. Each period, the Company evaluates the estimated remaining useful life of its
intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Management
tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.



Impairment
Assessment



The
Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate
that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business
climate, market conditions or other events that indicate an asset’s carrying amount may not be recoverable. Recoverability of these
assets is measured by comparing the carrying amount of each asset to the future cash flows the asset is expected to generate. If the
cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets
is reduced to fair value.



The
Company evaluates and tests the recoverability of its goodwill for impairment at least annually during its fourth quarter of each fiscal
year or more often if and when circumstances indicate that goodwill may not be recoverable.



Customer
Deposits



From
time-to-time the Company receives payment from customers in advance of delivering products to the customer. All such deposits are short
term in nature as the Company delivers the product, unfulfilled portions, or engineering services to the customer before the end of its
next annual fiscal period. These deposits are credited to the customer against product deliveries or at the completion of the customer’s
order.



Revenue
Recognition



Revenue
is recognized from the sale of hemp products when our performance obligation is satisfied. Our primary performance obligation (the distribution
and sales of hemp products) is satisfied upon the shipment of products to our customers, which is also when control is transferred. The
transfer of control of products to our customers is typically based on written sales terms that do not allow for a right of return after
30 days from the date of purchase. Revenue is recognized net of allowances for returns and any taxes collected from customers and subsequently
remitted to governmental authorities.

The
following table presents the Company’s revenues disaggregated by customer type for the six months ended March 31, 2023 and 2022:



|          |  | 2023 |           |  | 2022 |  
|--------- |  | ---- | --------- |  | ---- | -
|Wholesale |  | $    | 2,896,442 |  |      | $
|Retail    |  |      | 52,621    |  |      |  
|          |  | $    | 2,949,063 |  |      | $



The
following table presents the Company’s revenues disaggregated by location for the six months ended March 31, 2023 and 2022:



|              |  | 2023 |    |   | 2022 | 
|------------- |  | ---- | -- | - | ---- | 
|United States |  |      | 11 | % |      | 
|Russia        |  |      | 20 | % |      | 
|Italy         |  |      | 68 | % |      | 



|* = Less than 10% |  |  |  |  |  |  |  | 
|----------------- |  |  |  |  |  |  |  | 



F-7









The
following table presents the Company’s revenues from significant customers for the six months ended March 31, 2023 and 2022:



|                  |  | 2023 |    |   | 2022 | 
|----------------- |  | ---- | -- | - | ---- | 
|Customer A        |  |      | 65 | % |      | 
|Customer B        |  |      | 19 | % |      | 
|Customer C        |  |      | 10 | % |      | 
|                  |  |      |    |   |      | 
|* = Less than 10% |  |      |    |   |      | 



Financial
Instruments



In
accordance with the reporting requirements of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 825, Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify
as financial instruments under this standard and includes this additional information in the notes to the financial statements when the
fair value is different than the carrying value of those financial instruments. The Company does not have assets or liabilities measured
at fair value on a recurring basis except its derivative liability.



Consequently,
the Company did not have any fair value adjustments for assets and liabilities measured at fair value at the balance sheet dates, nor
gains or losses reported in the statements of operations that are attributable to the change in unrealized gains or losses relating to
those assets and liabilities still held during the periods ended March 31, 2023 and 2022, except as disclosed.



Fair
Value Measurement



ASC
Topic 820, Fair Value Measurements, provides a comprehensive framework for measuring fair value and expands disclosures which are required
about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the
inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and
the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:



Level
1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and
liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the
New York Stock Exchange.



Level
2 - Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported
date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced
with models using highly observable inputs.



Level
3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level
3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts
used to determine the fair value.



The
following tables present the Company’s assets and liabilities that were measured and recognized at fair value as of September 30,
2022 and March 31, 2023:



|September 30, 2022  
|--------------------
|                    
|Derivative liability





|March 31, 2023      
|--------------------
|                    
|Derivative liability







F-8













Under
the Company’s contract ordering policy, the Company first considers common shares issued and outstanding as well as reserved but
unissued equity awards, such as under an equity award program. All remaining equity linked instruments such as, but not limited to, options,
warrants, and debt and equity with conversion features are evaluated based on the date of issuance. If the number of shares which may
be issued under the Company’s agreements exceed the authorized number of shares or are unable to be determined, equity linked instruments
from that date forward are considered to be derivative liabilities until such time as the number of shares which may be issued under
the Company’s agreements no longer exceed the authorized number of shares and are able to be determined.



At
September 30, 2022, the Company estimated the fair value of the conversion feature derivatives embedded in the promissory note based
on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following weighted-average inputs: the price of the Company’s
common stock of $0.10; a risk-free interest rate of 3.83%; expected volatility of the Company’s common stock of 400%; estimated
exercise price of $0.0898; and term of approximately nine years.



At
March 31, 2023, the Company estimated the fair value of the conversion feature derivatives embedded in the promissory note based on assumptions
used in the Cox-Ross-Rubinstein binomial pricing model using the following weighted-average inputs: the price of the Company’s
common stock of $0.04; a risk-free interest rate of 3.48%; expected volatility of the Company’s common stock of 268%; estimated
exercise price of $0.04; and term of approximately nine years.



A
reconciliation of the changes in the Company’s Level 3 derivative liability at fair value is as follows:



|Balance - September 30, 2022 |  | $ | 8,908,686 |  
|---------------------------- |  | - | --------- | -
|Additions                    |  |   | -         |  
|Settlements                  |  |   | -         |  
|Change in fair value         |  |   | (909,987  | )
|Balance - March 31, 2023     |  | $ | 7,998,699 |  



Convertible
Instruments



The
Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, Derivatives
and Hedging Activities.



Applicable
GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative
financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and
risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host
contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at
fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same
terms as the embedded derivative instrument would be considered a derivative instrument.



The
Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated
from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of
conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the
commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements
are amortized over the term of the related debt to their stated date of redemption.



Beneficial
Conversion Features



ASC
470-20 applies to convertible securities with beneficial conversion features that must be settled in stock and to those that give the
issuer a choice in settling the obligation in either stock or cash. ASC 470-20 requires that the beneficial conversion feature should
be valued at the commitment date as the difference between the conversion price and the fair market value of the common stock into which
the security is convertible, multiplied by the number of shares into which the security is convertible. This amount is recorded as a
debt discount and amortized over the life of the debt. ASC 470-20 further limits this amount to the proceeds allocated to the convertible
instrument.



F-9









Research
and development costs



Research
and development costs are charged to expense as incurred and are included in operating expenses.



Advertising
Costs



The
costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses.



Income
Taxes



The
Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined
based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which
differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that
are expected to be realized.



The
Company follows ASC 740-10, Accounting for Uncertainty in Income Taxes. This interpretation requires recognition and measurement of uncertain
income tax positions using a “more-likely-than-not” approach. The Company evaluates its tax positions on an annual basis,
and as of September 30, 2022, no additional accrual for income taxes is necessary. The Company’s policy is to recognize both interest
and penalties related to unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities,
while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest or penalties since
its inception. The Company is required to file income tax returns in the U.S. federal tax jurisdiction and in various state tax jurisdictions
and the prior three fiscal years remain open for examination by federal and/or state tax jurisdictions. The Company is currently not
under examination by any other tax jurisdictions for any tax year.



(Loss)
Income Per Share of Common Stock



FASB
ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss)
per share (EPS) computations.



Basic
earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator
is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been
issued and if the additional common shares were dilutive.



The
Company had total potential additional dilutive securities outstanding at March 31, 2023 and September 30, 2022, as follows.



|                 |  | March 31, |             |  | September 30, | 
|---------------- |  | --------- | ----------- |  | ------------- | 
|                 |  | 2023      |             |  | 2022          | 
|Preferred H      |  |           | 48,780,490  |  |               | 
|Warrants         |  |           | 88,918,645  |  |               | 
|Options          |  |           | 22,500,000  |  |               | 
|Convertible debt |  |           | 90,426,058  |  |               | 
|                 |  |           | 250,625,193 |  |               | 



Commitments
and Contingencies



Liabilities
for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when management
assesses that it is probable that a liability has been incurred and the amount can be reasonable estimated.





Recently
Issued Accounting Pronouncements



In
August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging
- Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities
and equity. This ASU (a) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing
guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features
and cash conversion features in equity, separately from the host convertible debt or preferred stock; (b) revises the scope exception
from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s
own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (c) revises
the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments
by using the “if-converted” method. In addition, entities must presume share settlement for purposes of calculating diluted
earnings per share when an instrument may be settled in cash or shares. For smaller reporting companies, ASU 2020-06 is effective for
fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated
financial statements and related disclosures.



As
of March 31, 2023, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these
pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting
pronouncements has had or will have a material impact on the Company’s consolidated financial statements.



F-10







3.
Inventory



The
Company’s inventory consisted of the following at the respective balance sheet dates:



|                                       |  | March 31, |            |   | September 30, |  
|-------------------------------------- |  | --------- | ---------- | - | ------------- | -
|                                       |  | 2023      |            |   | 2022          |  
|Raw materials and packaging components |  | $         | 244,383    |   |               | $
|Finished goods                         |  |           | 1,350,048  |   |               |  
|Consigned goods                        |  |           | 79,000     |   |               |  
|Apparel                                |  |           | 96,186     |   |               |  
|Less obsolescence allowance            |  |           | (1,124,646 | ) |               |  
|                                       |  | $         | 644,971    |   |               | $



4.
Property and Equipment



The
Company’s property and equipment consisted of the following at the respective balance sheet dates:



|                              |  | March 31, |         |   | September 30, |  
|----------------------------- |  | --------- | ------- | - | ------------- | -
|                              |  | 2023      |         |   | 2022          |  
|Machinery and equipment       |  | $         | 86,264  |   |               | $
|Computer/office equipment     |  |           | 38,785  |   |               |  
|                              |  |           | 125,049 |   |               |  
|Less accumulated depreciation |  |           | (81,976 | ) |               |  
|                              |  | $         | 43,073  |   |               | $



5.
Debt



Notes
payable



The
Company’s notes payable as of September 30, 2022, are summarized as follows:



|Noteholder    |  | Origination |           |  | Maturity |  |             | Interest |  |  | Principal |   |  | Discount |           
|------------- |  | ----------- | --------- |  | -------- |  | ----------- | -------- |  |  | --------- | - |  | -------- | ----------
|Noteholder A1 |  |             | 8/15/2022 |  |          |  | 2/15/2024   |          |  |  | 6.667     | % |  | $        | 540,758   
|Noteholder A2 |  |             | 8/15/2022 |  |          |  | 2/15/2024   |          |  |  | 6.667     | % |  |          | 1,498,450 
|Noteholder A3 |  |             | 8/15/2022 |  |          |  | 2/15/2024   |          |  |  | 6.667     | % |  |          | 2,336,858 
|Noteholder B  |  |             | 9/2/2021  |  |          |  | 9/2/2022 *  |          |  |  | 12        | % |  |          | 100,000   
|Noteholder B  |  |             | 10/7/2021 |  |          |  | 10/7/2022** |          |  |  | 15        | % |  |          | 50,000    
|Noteholder C  |  |             | 4/1/2022  |  |          |  | 4/1/2023**  |          |  |  | 10        | % |  |          | 85,594    
|Noteholder C  |  |             | 8/15/2022 |  |          |  | 2/15/2024   |          |  |  | 6.667     | % |  |          | 1,876,191 
|Noteholder G  |  |             | 6/20/2017 |  |          |  | 8/5/2017*   |          |  |  | 18        | % |  |          | 55,353    
|Noteholder F  |  |             | 8/15/2022 |  |          |  | 2/15/2024   |          |  |  | 6.667     | % |  |          | 288,720   
|Noteholder D  |  |             | 8/15/2022 |  |          |  | 2/15/2024   |          |  |  | 6.667     | % |  |          | 1,263,164 
|Noteholder I  |  |             | 6/17/2020 |  |          |  | 6/17/2050   |          |  |  | 4         | % |  |          | 160,000   
|Noteholder J  |  |             | 8/15/2022 |  |          |  | 2/15/2024   |          |  |  | 6.667     | % |  |          | 640,239   
|Noteholder K  |  |             | 8/28/2021 |  |          |  | 9/1/2022*   |          |  |  | 15        | % |  |          | 50,000    
|Noteholder K  |  |             | 10/6/2021 |  |          |  | 10/6/2022** |          |  |  | 15        | % |  |          | 66,980    
|Noteholder L  |  |             | 7/12/2022 |  |          |  | -           |          |  |  | 10        | % |  |          | 24,500    
|Noteholder M  |  |             | 7/12/2022 |  |          |  | -           |          |  |  | 10        | % |  |          | 25,000    
|Noteholder M  |  |             | 7/25/2022 |  |          |  | -           |          |  |  | 5         | % |  |          | 30,000    
|Noteholder N  |  |             | 7/28/2022 |  |          |  | -           |          |  |  | 10        | % |  |          | 50,000    
|Noteholder O  |  |             | 8/31/2022 |  |          |  | 8/31/2031   |          |  |  | 3.15      | % |  |          | 8,000,000 
|              |  |             |           |  |          |  |             |          |  |  |           |   |  | $        | 17,141,807



F-11









The
Company’s notes payable as of March 31, 2023, are summarized as follows:



|              |  |             |           |  |          |  |            |          |  |  | Balances - March 31, 2023 |  
|------------- |  | ----------- | --------- |  | -------- |  | ---------- | -------- |  |  | ------------------------- | -
|Noteholder    |  | Origination |           |  | Maturity |  |            | Interest |  |  | Principal                 |  
|Noteholder A1 |  |             | 8/15/2022 |  |          |  | 2/15/2024  |          |  |  | 6.667                     | %
|Noteholder A1 |  |             | 1/31/2023 |  |          |  | 3/7/2023*  |          |  |  | 2                         | %
|Noteholder A2 |  |             | 8/15/2022 |  |          |  | 2/15/2024  |          |  |  | 6.667                     | %
|Noteholder A3 |  |             | 8/15/2022 |  |          |  | 2/15/2024  |          |  |  | 6.667                     | %
|Noteholder B  |  |             | 9/2/2021  |  |          |  | 9/2/2022*  |          |  |  | 12                        | %
|Noteholder B  |  |             | 10/7/2021 |  |          |  | 10/7/2022* |          |  |  | 15                        | %
|Noteholder C  |  |             | 4/1/2022  |  |          |  | 4/1/2023** |          |  |  | 10                        | %
|Noteholder C  |  |             | 8/15/2022 |  |          |  | 2/15/2024  |          |  |  | 6.667                     | %
|Noteholder C  |  |             | 1/31/2023 |  |          |  | 6/7/2023   |          |  |  | 8                         | %
|Noteholder G  |  |             | 6/20/2017 |  |          |  | 8/5/2017*  |          |  |  | 18                        | %
|Noteholder F  |  |             | 8/15/2022 |  |          |  | 2/15/2024  |          |  |  | 6.667                     | %
|Noteholder D  |  |             | 8/15/2022 |  |          |  | 2/15/2024  |          |  |  | 6.667                     | %
|Noteholder I  |  |             | 6/17/2020 |  |          |  | 6/17/2050  |          |  |  | 4                         | %
|Noteholder J  |  |             | 8/15/2022 |  |          |  | 2/15/2024  |          |  |  | 6.667                     | %
|Noteholder K  |  |             | 8/28/2021 |  |          |  | 9/1/2022*  |          |  |  | 15                        | %
|Noteholder K  |  |             | 10/6/2021 |  |          |  | 10/6/2022* |          |  |  | 15                        | %
|Noteholder L  |  |             | 7/12/2022 |  |          |  | -          |          |  |  | 10                        | %
|Noteholder M  |  |             | 7/12/2022 |  |          |  | -          |          |  |  | 10                        | %
|Noteholder M  |  |             | 7/25/2022 |  |          |  | -          |          |  |  | 5                         | %
|Noteholder N  |  |             | 7/28/2022 |  |          |  | -          |          |  |  | 10                        | %
|Noteholder O  |  |             | 8/31/2022 |  |          |  | 8/31/2031  |          |  |  | 3.15                      | %
|              |  |             |           |  |          |  |            |          |  |  |                           |  



*
In default at March 31, 2023

**
In default subsequent to March 31, 2023



Convertible
notes payable



The
Company’s convertible notes payable as of March 31, 2023, are summarized as follows:



|Noteholder   |  | Origination |           |  | Maturity |  |           | Interest |  |  | Conversion |   |  | Principal |        |        | Discount |  
|------------ |  | ----------- | --------- |  | -------- |  | --------- | -------- |  |  | ---------- | - |  | --------- | ------ | ------ | -------- | -
|Noteholder C |  |             | 8/23/2022 |  |          |  | 8/23/2023 |          |  |  | 12         | % |  | $         | 0.0245 | /share |          |  
|Noteholder D |  |             | 8/23/2022 |  |          |  | 8/23/2023 |          |  |  | 12         | % |  | $         | 0.0245 | /share |          |  
|Noteholder E |  |             | 11/4/2020 |  |          |  | 5/4/2021* |          |  |  | 15         | % |  | $         | 0.059  | /share |          |  
|             |  |             |           |  |          |  |           |          |  |  |            |   |  |           |        |        |          | $



*
In default at March 31, 2023



The
Company’s convertible notes payable as of September 30, 2022, are summarized as follows:



|Noteholder   |  | Origination |           |  | Maturity |  |           | Interest |  |  | Conversion |   |  | Principal |        |        | Discount |  
|------------ |  | ----------- | --------- |  | -------- |  | --------- | -------- |  |  | ---------- | - |  | --------- | ------ | ------ | -------- | -
|Noteholder C |  |             | 8/23/2022 |  |          |  | 8/23/2023 |          |  |  | 12         | % |  | $         | 0.0245 | /share |          |  
|Noteholder D |  |             | 8/23/2022 |  |          |  | 8/23/2023 |          |  |  | 12         | % |  | $         | 0.0245 | /share |          |  
|Noteholder E |  |             | 11/4/2020 |  |          |  | 5/4/2021  |          |  |  | 15         | % |  | $         | 0.059  | /share |          |  
|             |  |             |           |  |          |  |           |          |  |  |            |   |  |           |        |        |          | $



F-12







Line
of credit



On
March 14, 2023, the Company entered into an 8% inventory financing facility for the purchase of inventory. $500,000 is due on June 11,
2023, with the remaining balance and accrued interest due at maturity on July 11, 2023. At March 31, 2023, the outstanding balance totaled
$1,000,000.



Future
maturities



Future
maturities of the Company’s debt as of March 31, 2023, are as follows:



|September 30, 2023 |  | $ | 7,301,646  | 
|------------------ |  | - | ---------- | 
|September 30, 2024 |  |   | 4,360,144  | 
|September 30, 2025 |  |   | 3,400      | 
|September 30, 2026 |  |   | 3,500      | 
|September 30, 2027 |  |   | 3,600      | 
|Thereafter         |  |   | 8,143,000  | 
|                   |  | $ | 19,815,290 | 



6.
Payroll and Payroll Taxes Payable



The
Company’s payroll and payroll taxes payable consisted of the following at the respective balance sheet dates:



|                           |  | March 31, |         |  | September 30, |  
|-------------------------- |  | --------- | ------- |  | ------------- | -
|                           |  | 2023      |         |  | 2022          |  
|Accrued payroll - Officer  |  | $         | -       |  |               | $
|Accrued payroll - Employee |  |           | 128,105 |  |               |  
|Accrued payroll taxes      |  |           | 816,502 |  |               |  
|                           |  | $         | 944,607 |  |               | $



7.
Stockholders’ Deficit



During
the period ended March 31, 2023, the Company issued 1,000,000 shares of common stock in connection with a settlement agreement, as detailed
in Note 8.



During
the period ended March 31, 2023, the Company issued 1,719,100 shares of common stock as payment for accounts payable totaling $84,000.



Warrants



A
summary of the status of the Company’s warrant grants as of March 31, 2023, and the changes during the period then ended is presented
below:





|                                  |  |          |            |  |                  |   |      | Weighted-Average | 
|--------------------------------- |  | -------- | ---------- |  | ---------------- | - | ---- | ---------------- | 
|                                  |  |          |            |  | Weighted-Average |   |      | Remaining        | 
|                                  |  | Warrants |            |  | Exercise Price   |   |      | Contractual Life | 
|Outstanding at September 30, 2022 |  |          | 88,918,645 |  |                  | $ | 0.03 |                  | 
|Outstanding at March 31, 2023     |  |          | 88,918,645 |  |                  | $ | 0.03 |                  | 
|Exercisable at March 31, 2023     |  |          | 88,918,645 |  |                  | $ | 0.03 |                  | 





F-13







Options



During
the year ended September 30, 2022, the Company estimated the fair value of warrants issued based on assumptions used in the Cox-Ross-Rubinstein
binomial pricing model using the following inputs: the price of the Company’s common stock of $0.0398; risk-free interest rates
of 3.29%; expected volatility of the Company’s common stock of 462%; exercise price of $0.01; and terms of approximately one year.



During
August 2022, the Company issued options for the purchase of 22,500,000 shares of common stock in connection with a convertible note payable
(Note 5). The options expire after one year and have an exercise price of $0.01.



A
summary of the status of the Company’s option grants as of March 31, 2023 and the changes during the period then ended is presented
below:



|                                  |  |         |            |  |                  |   |      | Weighted-Average | 
|--------------------------------- |  | ------- | ---------- |  | ---------------- | - | ---- | ---------------- | 
|                                  |  |         |            |  | Weighted-Average |   |      | Remaining        | 
|                                  |  | Options |            |  | Exercise Price   |   |      | Contractual Life | 
|Outstanding at September 30, 2022 |  |         | 22,500,000 |  |                  | $ | 0.01 |                  | 
|Outstanding at March 31, 2023     |  |         | 22,500,000 |  |                  | $ | 0.01 |                  | 
|Exercisable at March 31, 2023     |  |         | 22,500,000 |  |                  | $ | 0.01 |                  | 



8.
Commitments and Contingencies



Settlement



During
October 2022, the Company settled a dispute with the Company’s former Chief Medical Officer. As part of the settlement, the Company
paid compensation totaling $109,000, which consisted of $25,000 in cash and 1,000,000 shares of common stock. The Company recorded the
settlement in accrued expenses at September 30, 2022. During November 2023, the 1,000,000 shares of common stock were issued.



Serious
Promotions, Inc.



In
June 2022, Serious Promotions, Inc. filed a Petition before the American Arbitration Association seeking monetary damages against Khode,
LLC. Serious Promotions alleges that Khode failed to make certain payments of fees related to the Endorsement and License Agreement entered
into by Serious Promotions and its president Khaled Mohamed Khaled (p/k/a DJ Khaled). Serious Promotions seeks $6,250,000 in damages.



In
July 2022, Khode, joined as a party by the Company, filed counterclaims against Serious Promotions, Khaled and Impact Brokers for breach
of the Endorsement and License Agreement and related violations of legal duties, seeking damages in an amount no less than $100,000,000.



Although
this arbitration is in its early stages, the Company is confident in its position, will vigorously defend its position, and prosecute
its counterclaims, and ultimately expects rulings in its favor.



Contracts
and commitments



During
October 2020, the Company entered into a five-year endorsement contract with an American DJ, record executive and producer, and media
personality. Pursuant to the endorsement contract, the Company is to make quarterly payments totaling $5,000,000 by July 1, 2025. During
the year ended September 30, 2021, the Company paid $750,000 under this contract. The agreement was terminated during the year ended
September 30, 2022. The Company is involved in litigation related to this agreement, as detailed above.





9.
Related Party Transactions



Todd
Davis, CEO, employment agreement



During
April 2005, the Company entered into an employment agreement with Todd Davis providing for an annual salary of $156,000. The Company’s
accrued payroll and payroll taxes payable (Note 6) includes amounts owed pursuant to the employment agreement which are unpaid as of
the balance sheet dates. This arrangement was modified effective on or about September 1, 2023, with compensation modified to $120,000
per year.



Rayne
Forecast Inc. consulting agreement



Rayne
Forecast, Inc. (RFI), an entity owned by the CEO, is a party with the Company to a Consulting Agreement, pursuant to which the CEO, through
RFI, provides certain services to the Company in connection with his role as the Company’s CEO and is compensated, through RFI,
for certain services rendered to the Company. Pursuant to the terms of the Consulting Agreement, as amended, the Company shall pay to
the CEO a minimum fee of $50,000 up to a maximum fee of $500,000 for the CEO’s reasonable services in any merger or acquisition
involving the Company. The agreement provides that any such fees are not “finder’s fees” and are not to be calculated
on the basis of any percentage of the amount of any financing or the deemed monetary value of any merger or acquisition transaction.
The fees may be paid in Company stock or cash depending, among other items, on the cash availability of the Company.



10.
Significant Customers



At
March 31, 2023 and September 30, 2022, the Company had no significant revenue or accounts receivable concentrations.



F-14







Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations



For
a description of our significant accounting policies and an understanding of the significant factors that influenced our performance
during the three months and six months ended March 31, 2023, this “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the condensed consolidated
financial statements, including the related notes, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our
Annual Report on Form 10-K for our fiscal year ended September 30, 2022 (the “Form 10-K”).



Note
about Forward-Looking Statements



This
Quarterly Report on Form 10-Q includes statements that constitute “forward-looking statements.” These forward-looking statements
are often characterized by the terms “may,” “believes,” “projects,” “intends,” “plans,”
“expects,” or “anticipates,” and do not reflect historical facts.



Specific
forward-looking statements contained in this portion of the Quarterly Report include, but are not limited to: (i) statements that are
based on current projections and expectations about the markets in which we operate, (ii) statements about current projections and expectations
of general economic conditions, (iii) statements about specific industry projections and expectations of economic activity, (iv) statements
relating to our future operations, prospects, results, and performance, and (v) statements that the cash on hand and additional cash
generated from operations together with potential sources of cash through issuance of debt or equity will provide the Company with sufficient
liquidity for the next 12 months.



Forward-looking
statements involve risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially
different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results, future
performance and capital requirements and cause them to materially differ from those contained in the forward-looking statements include
those identified in our Registration Statement on Form 10 under Item 1A “Risk Factors”, as well as other factors that we
are currently unable to identify or quantify, but that may exist in the future.



In
addition, the foregoing factors may generally affect our business, results of operations and financial position. Forward-looking statements
speak only as of the date the statements were made. We do not undertake and specifically decline any obligation to update any forward-looking
statements. Any information contained on our website: www.endexx.com or any other websites referenced in this Quarterly Report
are not part of this Quarterly Report.



Management’s
Discussion and Analysis of Financial Condition and Results of Operations



The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial
statements and related notes thereto included elsewhere in this report. In addition to historical financial information, the following
discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions,
such as our plans, objectives, expectations, and intentions. Forward-looking statements are statements not based on historical information
and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon
estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties, and
contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by us, or on our behalf. We disclose any obligation to update forward-looking statements. Our
actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result
of a number of factors, including those discussed under “Forward-Looking Statements,” “Item 1. Overview,” and
“Item 1A. Risk Factors” sections in this Report. We use words such as “anticipate,” “estimate,” “plan,”
“project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”
“may,” “will,” “should,” “could,” and similar expressions to identify forward-looking
statements.



Overview



Endexx®
is a Consumer Products (CPG) company specializing in plant-based formulations and innovative delivery systems, focused on creating “Better
Products for a Better You”©. Our focus is on developing the most innovative and effective products using all-natural plant-based
ingredients. Our companies, CBD UnlimitedTM and HylaTM, harness the power of plants and deliver clean ingredient formulations
with innovative technology systems.



Through
CBD Unlimited, we develop hemp-derived, cannabidiol-based products, each formulated to address key segments of the health and wellness
market. Through our subsidiaries, we make available for sale high-end, full-spectrum hemp-derived oils, extracts, topicals, and pet products,
all with the shared purpose of supporting the potential of relief of pain and inflammation for humans and pets, through our e-commerce
site www.cbdunlimited.com, as well as other online and in-store retailers. Through Hyla,
we produce and sell organic, plant-based, all-natural, zero-nicotine, tobacco-free vape
products under the Hyla brand. Each “HYLA device” contains a natural guarana extract that is blended with proprietary botanical
formulas. Hyla launched its products in October 2021 and its initial inventory (140,000 devices) was sold out the following month. Hyla’s
products bear the Underwriters Laboratories global safety certification and are CE approved.All of Hyla’s products are
available on its e-commerce site: www.tryhyla.com.



4







The
Company was incorporated in the State of Nevada on September 5, 1997 as Micron Solutions in order to complete a merger with Shillelagh.
In November 1997, Shillelagh merged with and into Micron Solutions, with Micron Solutions as the surviving entity. In 2002, Micron Solutions
entered into the Exchange Agreement with PanaMed, Inc., and all of its shareholders, pursuant to which PanaMed, Inc. became the Company’s
wholly-owned subsidiary. In connection with the Exchange Agreement, Micron also changed its name to PanaMed Corporation.



In
June 2005, we filed a Certificate of Amendment to Articles of Incorporation with the Secretary of State of the State of Nevada to change
our name to Endexx Corporation. At that time, we adopted our current trading symbol, “EDXC.” In September 2005, PanaMed Corporation
acquired VBB, an SaaS provider, through a merger, whereby VBB merged with and into us, and we were the surviving entity. Subsequently,
we operated as a diversified technology and SaaS and compliance and tracking systems company, until we shifted our focus to the hemp-derived
product industry in August 2014. In October 2018, we changed our name to CBD Unlimited, Inc., and in May 2020, we changed our name back
to Endexx Corporation, with CBD Unlimited, Inc., becoming our wholly-owned subsidiary. On January 25, 2021, we filed our Amended and
Restated Articles of Incorporation.



Results
of Operations



Three
Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022



Revenues



Revenues
for the three months ended March 31, 2023 were $2,457,354, as compared to $254,686 for the three months ended March 31, 2022, a $2,202,668
(865%) increase. The increase in revenue is attributable to additional revenues realized from Hyla, which was the subject of the transactions
contemplated by our Control Acquisition Agreement, that closed effective August 29, 2022 (the “Hyla Transaction”). The increases
in revenues are also partly attributable to improved supply-chain, increased consumer spending and increased marketing efforts in promoting
the Company’s products.



We
expect an increase in commercial revenue over the next 12 months as our business model is implemented and expanded and our commercial
and retail accounts continue to grow and expand the products being sold in each of their retail locations. Additionally, we will continue
to focus on the development of both current and new products while continuing to commercialize existing products lines.



Gross
Profit (Loss)



Gross
profit (loss) for the three months ended March 31, 2023 was a profit of $586,512, as compared to a gross profit of $175,530 for the three
months ended March 31, 2022. This $410,782 (234%) improvement in gross profit for this period was attributable to the closing of the
Hyla Transaction. The improved gross profit was further enhanced by improvements in production costs and decreases in inventory impairment
between the periods.



Operating
Expenses



Operating
expenses for the three months ended March 31, 2023, were $726,673, as compared to $751,677 for the three months ended March 31, 2022,
a decrease of $25,004. The decrease in operating expenses over the prior period can be attributed to lower advertising and promotional
expenses, professional fees, payroll fees, and research and development expenses, partially offset by increased general and administrative
expenses.



We
expect that operating expenses will remain consistent over the next 12 months as our long-term growth strategy will require significant
changes in personnel and facilities, offset increased research and development expenses to ensure that products nearing commercialization
are brought to market as quickly and as effectively. We cannot provide any assurances that our strategy will be effective.



Other
(Income) and Expenses



Other
expenses for the three months ended March 31, 2023 were $1,108,784, as compared to expenses of $2,203,144 for the three months ended
March 31, 2022, a $1,094,360 decrease. The decrease resulted from significant loss from the change in fair value of derivative liability
offset by significant gain from settlement of derivative liability, increases in financing costs and discount amortization, interest
expenses, and default penalties, and significant gains on settlement of liabilities and disposition of assets.



Derivative
liabilities are associated with loans that are convertible or have variable pricing on the equivalent shares of Common Stock. At the
end of each period, these derivative liabilities are valued, and the net change is recorded as a gain or loss in other expense and income.



Loss
from Operations and Total Net Loss



Loss
from operations for the three months ended March 31, 2023 was $140,161, as compared to loss from operations of $575,947 for the three
months ended March 31, 2022, an improvement in net loss from operations of $435,789. The improvement in loss from operations was the
result of an increase in gross revenues, lower costs of revenues and minimal inventory impairment, that was offset by marginally higher
operating expenses.



5







Total
net loss for the three months ended March 31, 2023 was $1,248,945, as compared to a total net loss of $2,779,091 for the three months
ended March 31, 2022, an improvement of $1,530,146 in total net loss, primarily as a result of lower losses attributable to derivative
liabilities.



At
the end of each period, derivative liabilities are valued, and the net change is recorded as a gain or loss in other expense and income.



We
do not expect to realize net income in the near term as anticipated operational expenses are expected to increase as a result of increased
research and development expenses, consulting fees, payroll expenses, and administrative costs as staffing increases. Despite management’s
focus on ensuring operating efficiencies, we expect to continue to operate at a loss through fiscal 2022 only in part due to the COVID-19
pandemic. Nevertheless, we expect that, during our current fiscal year, the adverse impact of COVID-19 on our business will slowly abate,
as the positivity rate in tests for COVID-19 continues to decrease along with the new infection and mortality rates and the number of
people becoming vaccinated continues to increase.



Six
Months Ended March 31, 2023 Compared to Six Months Ended March 31, 2022



Revenues



Revenues
for the six months ended March 31, 2023 were $2,949,063, as compared to $529,277 for the six months ended March 31, 2022, a $2,419,277
(457%) increase. The increase in revenue is attributable to additional revenues realized from Hyla as a result of the closing of the
Hyla Transaction. The increases in revenues are also partly attributable to improved supply-chain, increased consumer spending and increased
marketing efforts in promoting the Company’s products.



We
expect an increase in commercial revenue over the next 12 months as our business model is implemented and expanded and our commercial
and retail accounts continue to grow and expand the products being sold in each of their retail locations. Additionally, we will continue
to focus on the development of both current and new products while continuing to commercialize existing products lines.



Gross
Profit (Loss)



Gross
profit (loss) for the six months ended March 31, 2023 was a profit of $725,450, as compared to a gross profit of $191,985 for the six
months ended March 31, 2022. This $533,456 (278%) improvement in gross profit for this period was attributable to the closing of the
Hyla Transaction. The improved gross profit was further enhanced by improvements in production costs and decreases in inventory impairment
between the periods.



Operating
Expenses



Operating
expenses for the six months ended March 31, 2023, were $2,056,543, as compared to $2,191,877 for the six months ended March 31, 2022,
a decrease of $135,334. The decrease in operating expenses over the prior period can be attributed to lower advertising and promotional
expenses, professional fees, payroll fees, and research and development expenses, partially offset by increased general and administrative
expenses.



We
expect that operating expenses will remain consistent over the next 12 months as our long-term growth strategy will require significant
changes in personnel and facilities, offset increased research and development expenses to ensure that products nearing commercialization
are brought to market as quickly and as effectively. We cannot provide any assurances that our strategy will be effective.



Other
(Income) and Expenses



Other
expenses for the six months ended March 31, 2023 was $942,624, as compared to expenses of $2,426,407 for the six months ended March 31,
2022, a $1,483,783 decrease. The decrease resulted from significant loss from the change in fair value of derivative liability offset
by significant gain from settlement of derivative liability, increases in financing costs and discount amortization, interest expenses,
and default penalties, and significant gains on settlement of liabilities and disposition of assets.



6







Derivative
liabilities are associated with loans that are convertible or have variable pricing on the equivalent shares of Common Stock. At the
end of each period, these derivative liabilities are valued, and the net change is recorded as a gain or loss in other expense and income.



Loss
from Operations and Total Net Loss



Loss
from operations for the six months ended March 31, 2023 were $1,331,093, as compared to loss from operations of $1,999,892 for the six
months ended March 31, 2022, an improvement in net loss from operations of $668,799. The improvement in loss from operations was the
result of an increase in gross revenues, lower costs of revenues and minimal inventory impairment, that was offset by marginally higher
operating expenses.



Total
net loss for the six months ended March 31, 2023 was $2,273,717, as compared to a total net loss of $4,426,299 for the six months ended
March 31, 2022, an improvement of $2,152,299 in total net loss, primarily as a result of lower losses attributable to derivative liabilities.



At
the end of each period, derivative liabilities are valued, and the net change is recorded as a gain or loss in other expense and income.



We
do not expect to realize net income in the near term as anticipated operational expenses are expected to increase as a result of increased
research and development expenses, consulting fees, payroll expenses, and administrative costs as staffing increases. Despite management’s
focus on ensuring operating efficiencies, we expect to continue to operate at a loss through fiscal 2022 only in part due to the COVID-19
pandemic. Nevertheless, we expect that, during our current fiscal year, the adverse impact of COVID-19 on our business will slowly abate,
as the positivity rate in tests for COVID-19 continues to decrease along with the new infection and mortality rates and the number of
people becoming vaccinated continues to increase.



Liquidity
and Capital Resources – Six months ended March 31, 2023



Going
Concern



We
have incurred operating losses since inception and have negative cash flow from operations. As of March 31, 2023, we had a stockholders’
deficit of $13,841,639, a working capital deficit of $17,384,549, an accumulated deficit of $46,208,070 and incurred a net loss of $1,248,865
in the three months ended March 31, 2023. Additionally, we utilized $840,272 in cash for operations and utilized $0 in cash for investing
activities during the six months ended March 31, 2023, while we received $338,308 in cash from financing activities. As a result, our
continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flow
from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations,
but there can be no assurance that such financing will be available on terms acceptable to us, if at all.



Our
consolidated financial statements have been prepared on a going concern basis, which implies we may not continue to meet our obligations
and continue our operations for the next fiscal year. The continuation of our Company as a going concern is dependent upon our ability
to obtain necessary debt or equity financing to continue operations until we begin generating positive cash flow.



As
of March 31, 2023, we had a cash position of $154,812. We estimate our operating expenses for the near- and mid-term may continue to
exceed the revenues that we may generate, and we may need to raise capital through either debt or equity offerings to continue operations.
We are in the early stages of our business. We are required to fund growth from financing activities, and we intend to rely on a combination
of equity and debt financings. Due to market conditions and the early stage of our operations, there is considerable risk that we will
not be able to raise such financings at all, or on terms that are not overly dilutive to our existing stockholders. We can offer no assurance
that we will be able to raise such funds. If we are unable to raise the funds we require for all of our planned operations, we may be
forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations,
including our ability to develop new products and continue our current operations. As a result, our business may suffer, and we may be
forced to reduce or discontinue operations.



7







There
is no assurance that we will ever be profitable or that debt or equity financing will be available to us in the amounts, on terms, and
at times deemed acceptable to us, if at all. The issuance of additional equity securities by us would result in a significant dilution
in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, would increase
our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us,
we may be unable to continue our business, as planned, and as a result may be required to scale back or cease operations for our business,
the result of which would be that our stockholders would lose some or all of their investment. The consolidated financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts
and classifications of liabilities that may result should we be unable to continue as a going concern.



Cash
Flow – Operating Activities



For
the six months ended March 31, 2023, our cash used in operating activities amounted to an outflow of $840,272, compared to cash used
during the six months ended March 31, 2022 of $1,120,620. The $280,348 decrease in cash used in our operating activities is due to changes
in the fair value of derivative liabilities, decreases in inventory impairment and loss from settlement liabilities.



Cash
Flow – Financing Activities



For
the six months ended March 31, 2023, our cash provided by financing activities amounted to $338,308, which includes $0 in proceeds received
from the sale of our Common Stock, $0 in proceeds from the issuance of convertible notes, $227,500 in proceeds from the issuance of notes
payable, $1,000,000 in proceeds from a line of credit, offset by $827,930 repayment of notes payable and $61,262 paid as distribution
to non-controlling interest.



For
the six months ended March 31, 2022, our cash provided by financing activities amounted to $1,116,833, which includes $0 in proceeds
received from the sale of our Common Stock, $999,853 in proceeds from the issuance of convertible notes, and $116,980 in proceeds from
the issuance of notes payable.



Cash
Flow – Investing Activities



Net
cash used in investing activities in the six months ended March 31, 2023 and 2021 was $0 and $9,500, respectively.



Accounts
Receivable and Allowance for Doubtful Account Receivable



Accounts
receivable are recorded at net realizable value. We determine provisions for uncollectible accounts, sales returns, and claims based
upon factors including the credit risk and activity of specific distributors and resellers, historical trends, and other information.
If we become aware of a specific distributor’s or reseller’s inability to meet its financial obligations, bad debt charges
are recorded based on an overall assessment of past due accounts receivable outstanding. In the opinion of management, a provision was
deemed necessary for uncollectible accounts.



Inventory



The
cost of inventory using the standard cost method, which approximates actual cost based on a first-in, first-out method. Our inventories
are valued at the lower of cost or net realizable value. Our inventory consists almost entirely of finished and unfinished goods, and
freight, which include vapes, CBD creams, oils, capsules, and sprays. We periodically evaluate and adjust inventories for obsolescence.
In the opinion of management, no provision for obsolescence is deemed necessary. The shelf life of all beverage inventory is two years.
As of March 31, 2023, we had approximately $644,971 of product in inventory, which was an decrease of approximately $132,941, compared
to approximately $777,912 at September 30, 2022. We expect the balance of inventory to increase in direct relation to the increase in
sales that we expect.



Goodwill
and Intangible Assets



Goodwill
arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred, plus
the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed
as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life are
not amortized, but tested for impairment at least annually or more frequently if events and circumstances exists that indicate that a
goodwill impairment test should be performed. We have selected December 31 as the date to perform the annual impairment test.



8







Intangible
assets represent both indefinite lived and definite lived assets. Trademarks are deemed to have definite useful lives of ten years, are
amortized, and are tested annually for impairment. Intangible assets are reported on the balance sheet at cost less accumulated amortization.
We have selected December 31 as the date to perform the annual impairment test.



Stock-Based
Compensation



FASB’s
ASC Topic 718, Stock Compensation (formerly, FASB Statement 123R), prescribes accounting and reporting standards for all stock-based
payment transactions in which employee and non-employee services are acquired. We measure the cost of employee and non-employee services
received in exchange for an award of equity instruments based on the grant-date fair value of the award. Fair value for restricted stock
awards is valued using the closing price of our Common Stock on the date of grant. For the six months ended March 31, 2023 and 2022,
we recognized stock-based compensation expense of approximately $0, and $300,000 respectively.



Off
Balance Sheet Arrangements



As
of March 31, 2023 and on March 31, 2022, we had no off-balance sheet arrangements that have or are reasonably likely to have a current
or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures, or capital resources that is material to stockholders.



Critical
Accounting Policies



The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues
and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe
to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions.
We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate
estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and
assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.



Item
3 - Quantitative and Qualitative Disclosures About Market Risk



As
a Smaller Reporting Company, we are not required to provide the information required by this Item.



Item
4. Controls and Procedures



Evaluation
of Disclosure control and Procedures. We carried out an evaluation, under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal
financial officer concluded that, as of March 31, 2023, the period covered in this Report, our disclosure controls and procedures were
not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended,
is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required
disclosure.



Changes
in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting
during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.



9







Inherent
Limitations on the Effectiveness of Controls



Management
does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all
errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective
control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error
or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.



These
inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a
simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people,
or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become
inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.



PART
II – OTHER INFORMATION



Item
1. Legal Proceedings



In
June 2022, Serious Promotions, Inc. filed a Petition before the American Arbitration Association seeking monetary damages against Khode,
LLC, a joint venture entered into by Serious Promotions and us. Serious Promotions alleges that Khode failed to make certain payments
of fees related to the Endorsement and License Agreement entered into by Serious Promotions and its president Khaled Mohamed Khaled (p/k/a
DJ Khaled). Serious Promotions seeks $6,250,000 in damages.



In
July 2022, Khode, joined as a party by us, filed counterclaims against Serious Promotions, Khaled and Impact Brokers for breach of the
Endorsement and License Agreement and related violations of legal duties, seeking damages in an amount no less than $100,000,000.



Although
this arbitration is in its early stages, we are confident in our position, will vigorously defend our position, and prosecute our counterclaims,
and ultimately expect a ruling in our favor.



We
know of no other material proceedings in which any of our directors, officers, or affiliates, or any registered or beneficial stockholder
is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries, including, but
not limited to:



| | (a) | any petition under the
    federal bankruptcy laws or any state insolvency laws filed by or against, or an appointment of a receiver, fiscal agent, or similar
    officer by a court for the business or property of such person, or any partnership in which such person was a general partner at
    or within two years before the time of such filing, or any corporation or business association of which such person was an executive
    officer at or within two years before the time of such filing;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | any conviction in a criminal
    proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (c) | being
    subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction,
    permanently or temporarily enjoining such person from, or otherwise limiting, the following activities: (i) acting as a futures commission
    merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any
    other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment
    adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company,
    bank, savings and loan association, or insurance company, or engaging in or continuing any conduct or practice in connection with
    such activity; engaging in any type of business practice; or (ii) engaging in any activity in connection with the purchase or sale
    of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;



10







| | (d) | being the subject of any
    order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending,
    or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (c)(i) above,
    or to be associated with persons engaged in any such activity;                                                                                                                                                                                                                                                                                                                                                             
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (e) | being found by a court
    of competent jurisdiction (in a civil action), the Commission to have violated a federal or state securities or commodities law,
    and the judgment in such civil action or finding by the Commission has not been reversed, suspended, or vacated;                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (f) | being found by a court
    of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities
    law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed,
    suspended, or vacated;                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (g) | being the subject of, or
    a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended,
    or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any
    law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent
    injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal
    or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity;
    or
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (h) | being the subject of, or
    a party to, any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization (as defined
    in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or
    any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated
    with a member.                                                                                                                                                                                                                                                                     



Item
1A. Risk Factors



We
are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information
under this item.



Item
2. Unregistered Sales of Equity Securities and Use of Proceeds



We
issued the following shares of our Common Stock in the three months ended March 31, 2023:



None.



Item
3. Defaults upon Senior Securities



None



Item
4. Mine Safety Disclosures



N/A



Item
5. Other Information



None



11







Item
6. Exhibits



The
following exhibits are filed with or incorporated by reference into this Quarterly Report.



|Exhibit
    No. |  | Description                                                                                                                                         
|--------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                                                     
|2.1**           |  | Share Exchange Agreement by and among PanaMed, Inc and the Registrant, dated February 22, 2002                                                      
|                |  |                                                                                                                                                     
|2.2
    **      |  | Share Exchange Agreement by and among PhytoLabs, LLC and the Registrant, dated March 1, 2017                                                        
|                |  |                                                                                                                                                     
|2.3a**          |  | Common Stock Share Exchange Agreement between Go Green Global Inc and the Registrant dated May 1, 2018                                              
|                |  |                                                                                                                                                     
|2.3b**          |  | First Amended Common Stock Share Exchange Agreement by and among Go Green Global, Inc. and the Registrant, dated July 10, 2018                      
|                |  |                                                                                                                                                     
|3.1**           |  | Articles of Incorporation of the Registrant filed with the Secretary of State of the State of Nevada on September 5, 1997                           
|                |  |                                                                                                                                                     
|3.1a**          |  | Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of Nevada on March 1, 2002                 
|                |  |                                                                                                                                                     
|3.1b**          |  | Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of the State of Nevada on June 22, 2005    
|                |  |                                                                                                                                                     
|3.1c**          |  | Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of Nevada on October 25, 2018              
|                |  |                                                                                                                                                     
|3.1d**          |  | Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of Nevada on May 3, 2020                   
|                |  |                                                                                                                                                     
|3.1e**          |  | Amended and Restated Articles of Incorporation filed with the Secretary of State of the State of Nevada on January 25, 2021                         
|                |  |                                                                                                                                                     
|3.2**           |  | Amended and Restated Bylaws of the Registrant, dated January 25, 2021                                                                               
|                |  |                                                                                                                                                     
|3.3**           |  | Certificate of Designation of Series Z Preferred filed with the Secretary of State of the State of Nevada, Dated January 1, 2021                    
|                |  |                                                                                                                                                     
|4.1**           |  | Amended Common Stock Purchase Warrant of the Registrant, dated February 1, 2019                                                                     
|                |  |                                                                                                                                                     
|4.2**           |  | Amended Common Stock Purchase Warrant of the Registrant, dated June 5, 2019                                                                         
|                |  |                                                                                                                                                     
|4.3**           |  | Amended Common Stock Purchase Warrant of the Registrant, dated July 7, 2019                                                                         
|                |  |                                                                                                                                                     
|4.4**           |  | Amended Common Stock Purchase Warrant of the Registrant, dated August 1, 2019                                                                       
|                |  |                                                                                                                                                     
|4.5**           |  | Amended Common Stock Purchase Warrant of the Registrant, dated August 12, 2019                                                                      
|                |  |                                                                                                                                                     
|4.6**           |  | Amended Common Stock Purchase Warrant of the Registrant, dated September 15, 2019                                                                   
|                |  |                                                                                                                                                     
|4.7**           |  | Amended Common Stock Purchase Warrant of the Registrant, dated October 5, 2019                                                                      
|                |  |                                                                                                                                                     
|4.8**           |  | Amended Common Stock Purchase Warrant of the Registrant, dated February 5, 2020                                                                     
|                |  |                                                                                                                                                     
|4.8a^           |  | Warrant Modification and Clarification Agreement between the Registrant and the holder of eight Common Stock Purchase Warrants, dated March 31, 2021



12







|4.9#     |  | Common Stock Purchase Warrant granted by the Registrant, dated May 10, 2010 (2,500,000 shares)                                                                                      
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |  |                                                                                                                                                                                     
|4.10#    |  | Common Stock Purchase Warrant granted by the Registrant, dated May 10, 2010 (5,185,185 shares)                                                                                      
|         |  |                                                                                                                                                                                     
|10.1**   |  | Stock Purchase Agreement by and among Kush Inc and the Registrant, dated February 1, 2020                                                                                           
|         |  |                                                                                                                                                                                     
|10.2**   |  | Stock Purchase Agreement by and between CBD Life Brands, Inc. and the Registrant, dated March 1, 2020                                                                               
|         |  |                                                                                                                                                                                     
|10.3a**  |  | Operating Agreement by and between Khode, LLC and the Registrant, dated October 1, 2020                                                                                             
|         |  |                                                                                                                                                                                     
|10.3b**  |  | Endorsement Agreement by and among Khode, LLC and the Registrant                                                                                                                    
|         |  |                                                                                                                                                                                     
|10.4**   |  | Stock Purchase Agreement by and among Retail Pro Associates, Inc. and the Registrant, dated April 25, 2020                                                                          
|         |  |                                                                                                                                                                                     
|10.5**   |  | Sale and Distribution Agreement by and among CBD Health Solutions and the Registrant, dated January 28,2019                                                                         
|         |  |                                                                                                                                                                                     
|10.6**   |  | Distribution Agreement by and among Gold Coast and the Registrant, dated February 17, 2019                                                                                          
|         |  |                                                                                                                                                                                     
|10.7**   |  | Sales Representative Agreement by and among Impulse Health and the Registrant, dated December 15, 2017                                                                              
|         |  |                                                                                                                                                                                     
|10.8**   |  | 3PL Agreement by and among Virtual Supply and the Registrant, dated August 7, 2019                                                                                                  
|         |  |                                                                                                                                                                                     
|10.9**   |  | Electronics Payment Agreement by and among Walgreens, Inc and the Registrant dated February 5, 2019                                                                                 
|         |  |                                                                                                                                                                                     
|10.10**  |  | Employment Contract – Todd Davis, dated April 5, 2005                                                                                                                               
|         |  |                                                                                                                                                                                     
|10.11**  |  | Consulting Agreement between Rayne Forecast Inc and the Registrant, dated September 1, 2001                                                                                         
|         |  |                                                                                                                                                                                     
|10.11a** |  | Amended Consulting Agreement between Rayne Forecast Inc and the Registrant, dated October 1, 2009                                                                                   
|         |  |                                                                                                                                                                                     
|10.12^   |  | Securities Purchase Agreement between the Registrant and an investor, dated October 11, 2019                                                                                        
|         |  |                                                                                                                                                                                     
|10.13^   |  | Security Agreement between the Registrant and an investor, dated October 11, 2019                                                                                                   
|         |  |                                                                                                                                                                                     
|10.14^   |  | Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $750,000, dated October 19, 2019                                                            
|         |  |                                                                                                                                                                                     
|10.15^   |  | Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $700,000, dated November 1, 2019                                                            
|         |  |                                                                                                                                                                                     
|10.16^   |  | Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $550,000, dated January 16, 2020                                                            
|         |  |                                                                                                                                                                                     
|10.17^   |  | Update Agreement between the Registrant and an investor in respect of the Senior Secured Convertible Promissory Notes dated October 10, 2019, November 1, 2019, and January 16, 2020
|         |  |                                                                                                                                                                                     
|10.18^   |  | Convertible Note Purchase Agreement between the Registrant and an institutional investor, dated January 22, 2021                                                                    
|         |  |                                                                                                                                                                                     
|10.19^   |  | Security Agreement between the Registrant and an institutional investor, dated January 22, 2021                                                                                     



13







|10.20^ |  | Intellectual Property Security Agreement between the Registrant and an institutional investor, dated January 22, 2021                                
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                      
|10.21^ |  | Registration Rights Agreement between the Registrant and an institutional investor, dated January 22, 2021                                           
|       |  |                                                                                                                                                      
|10.22^ |  | Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $1,250,000, dated January 22, 2021                           
|       |  |                                                                                                                                                      
|10.23^ |  | Common Stock Purchase Warrant of the Registrant exercisable for up to 10,416,667 shares of the Registrant’s common stock, granted on January 22, 2021
|       |  |                                                                                                                                                      
|10.24^ |  | Percentage Payment Agreement between the Registrant and a third party, dated January 22, 2021                                                        
|       |  |                                                                                                                                                      
|10.25^ |  | Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $300,000, dated March 5, 2021                                
|       |  |                                                                                                                                                      
|10.26^ |  | Common Stock Purchase Warrant of the Registrant exercisable for up to 3,111,111 shares of the Registrant’s common stock, granted on March 5, 2021    
|       |  |                                                                                                                                                      
|10.27# |  | Securities Purchase Agreement of the Registrant, dated May 10, 2021 ($386,400)                                                                       
|       |  |                                                                                                                                                      
|10.28# |  | Promissory Note of the Registrant, dated May 10, 2021 ($386,400)                                                                                     
|       |  |                                                                                                                                                      
|10.29# |  | Securities Purchase Agreement of the Registrant, dated May 10, 2021 ($750,000)                                                                       
|       |  |                                                                                                                                                      
|10.30# |  | Promissory Note of the Registrant, dated May 10, 2021 ($250,000)                                                                                     
|       |  |                                                                                                                                                      
|10.31# |  | Registration Rights Agreement, dated May 10, 2021                                                                                                    
|       |  |                                                                                                                                                      
|10.32@ |  | Exchange Agreement between Rayne Forecast, Inc., and the Registrant, effective as of September 30, 2021                                              
|       |  |                                                                                                                                                      
|10.33@ |  | Exchange Agreement between Todd Davis and the Registrant, effective as of September 30, 2021                                                         
|       |  |                                                                                                                                                      
|11.1** |  | Audit Committee Charter                                                                                                                              
|       |  |                                                                                                                                                      
|11.2** |  | Compensation Committee Charter                                                                                                                       
|       |  |                                                                                                                                                      
|11.3** |  | Corporate Governance and Nominating Committee Charter                                                                                                
|       |  |                                                                                                                                                      
|21.1** |  | List of Subsidiaries                                                                                                                                 
|       |  |                                                                                                                                                      
|31.1*  |  | Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                 
|       |  |                                                                                                                                                      
|31.2*  |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|       |  |                                                                                                                                                      
|32.1*  |  | Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                 
|       |  |                                                                                                                                                      
|32.2*  |  | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                               



14







|x.
    101.INS  |  | Inline
    XBRL Instance Document                                              
|--------------- |  | -------------------------------------------------------------------------------
|                |  |                                                                                
|Ex.
    101.SCH |  | Inline
    XBRL Taxonomy Extension Schema Document                             
|                |  |                                                                                
|Ex.
    101.CAL |  | Inline
    XBRL Taxonomy Extension Calculation Linkbase Document               
|                |  |                                                                                
|Ex.
    101.DEF |  | Inline
    XBRL Taxonomy Extension Definition Linkbase Document                
|                |  |                                                                                
|Ex.
    101.LAB |  | Inline
    XBRL Taxonomy Extension Label Linkbase Document                     
|                |  |                                                                                
|Ex.
    101.PRE |  | Inline
    XBRL Taxonomy Extension Presentation Linkbase Document              
|                |  |                                                                                
|104             |  | Cover
    Page Interactive Data File (embedded within the Inline XBRL document)



*-
Filed herewith.



**
- Filed as exhibits with equivalent exhibit numbers to our Registration Statement on Form 10, filed with the Commission on March 4, 2021,
each of which is incorporated herein by reference thereto.



^
- Filed as exhibits with equivalent exhibit numbers to our Pre-Effective Amendment No. 1 to our Registration Statement on Form 10, filed
with the Commission on April 8, 2021, each of which is incorporated herein by reference thereto.



#
- Filed as exhibits with equivalent exhibit numbers to our Quarterly Report on Form 10-Q for our fiscal quarter ended March 31, 2022,
filed with the Commission on May 23, 2022, each of which is incorporated herein by reference thereto.



@
- Filed as exhibits with equivalent exhibit numbers to our Annual Report on Form 10-K for our fiscal year ended September 30, 2022, filed
with the Commission on March 31, 2023, each of which is incorporated herein by reference thereto.



15







SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



ENDEXX
Corporation



|May 22, 2023 | By: | /s/
    Todd Davis     
|------------ | --- | -----------------------
|             |     | Todd Davis             
|             |     | Chief Executive Officer



Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.



|/s/
    Todd Davis                       |  | Dated: May 22, 2023
|---------------------------------------- |  | -------------------
|Todd Davis                               |  |                    
|President, Chief Executive Officer,      |  |                    
|Secretary and Chairman and Director      |  |                    
|                                         |  |                    
|/s/ Steven
    M Plumb                   |  | Dated: May 22, 2023
|Steven M Plumb                           |  |                    
|Director
    Chief
    Financial Officer |  |                    
|                                         |  |                    
|/s/ Nick
    Mehdi                       |  | Dated: May 22, 2023
|Nick
    Mehdi
    Director              |  |                    
|                                         |  |                    
|/s/ Irving
    Minnaker                  |  | Dated: May 22, 2023
|Irving
    Minnaker
    Director         |  |                    
|                                         |  |                    
|/s/ Dustin
    Sullivan                  |  | Dated: May 22, 2023
|Dustin
    Sullivan
    Director         |  |                    



16